Galaxy increases rights issue entitlement proceeds, trading to resume

Galaxy increases rights issue entitlement proceeds, trading to resume 

    --  Galaxy shares to resume trading on ASX today following $17.2
        million capital raising
    --  Balance sheet strengthened, company to focus on production
    --  Business operations moving forward with cost reduction review


PERTH, Australia, Aug. 27, 2013 /CNW Telbec/ - Galaxy Resources Ltd (ASX: GXY) 
("Galaxy" or "the Company") advises proceeds raised under its 1 for 1 pro-rata 
non-renounceable entitlement offer (Entitlement Offer) and the shortfall have 
reached a total $17.2 million, 43% above the minimum required under the 
raising of $12 million.

The Company also advises that its shares will recommence trading on the ASX 

The proceeds from the raising to date will be used for partial debt pay down 
to Chinese lenders, working capital for the Jiangsu Lithium Carbonate Plant 
(Jiangsu) in China and the Sal de Vida Lithium Brine and Potash Project (Sal 
de Vida) in Argentina, and to pay costs associated with the raising.

Galaxy Interim Managing Director Anthony Tse said: "We are pleased to have 
received solid shareholder support to date, which has included participation 
from our major shareholders M&G and Deutsche Bank. Our strengthened balance 
sheet position under the rights issue will allow us to implement a range of 
strategic initiatives, manage our finances and progress our operations.

"We believe that the successful raising, together with ongoing balance sheet 
initiatives will allow the Company to focus on its operations and production 
ramp up. Moreover, we remain firmly committed to our strategy of becoming a 
significant global lithium producer."

Company Update

The recently-formed Special Management Committee is overseeing a number of 
financial and operational restructuring initiatives. The primary goal is to 
reduce costs and overall debt. This will include a review of the composition 
of the Company's Board and management and the potential sale of non-core 
assets within the Company's portfolio.

As part of the Company's ongoing balance sheet restructuring, management has 
recently concluded a successful negotiation with the Company's convertible 
bondholders to restructure its outstanding $61.5 million 8% convertible bonds 
previously redeemable on 19 November 2013. The outstanding convertible bonds 
were an issue of concern for a number of Galaxy's investors, and the 
restructuring now alleviates a significant cash need in November this year, as 
well as providing a means by which some of that outstanding convertible bond 
debt can be converted into equity. For any principal and accrued interest 
outstanding as at 19 November 2013, bondholders can continue to hold the bonds 
until the maturity date of 19 November 2015 with a 2% increase in the coupon 
rate to 10% coupon per annum or convert the remaining bonds into shares and 
receive 1.5 options per share (on the same terms as the Entitlement Offer).

In addition, Galaxy has managed to pay down or reschedule near term payments 
due under its total of $113 million in loans with China Construction Bank, 
Industrial and Commercial Bank of China, and Shanghai Pudong Development Bank, 
further alleviating short term funding requirements. Discussions are 
continuing with these banks to achieve an overall debt profile that is better 
aligned with the current developmental stage of the business and its cashflows.

Galaxy has committed to reducing corporate costs in 2013 from $17.6 million in 
2012 to $12.2 million. In the next 12 months, further costs savings of $7.0 
million are targeted.

The ramp-up of the Jiangsu Plant continues to progress and, as previously 
announced, the Company will now focus on accelerating the ramp-up to full 
production capacity. Jiansgu remains a core strategic asset for Galaxy as it 
increases production and sales of lithium carbonate and the Company remains 
confident of reaching a cash flow break even status at the Jiangsu operation 
later in the year.

Similarly, Sal de Vida remains a key strategic project for the Company. 
Discussions are continuing around project funding and development while the 
Company continues to assess various alternative options.

About Galaxy (ASX: GXY)

Galaxy Resources Ltd ("Galaxy") is an Australian-based global lithium company 
with lithium production facilities, hard rock mines and brine assets in 
Australia, China, Canada and Argentina. The Company is a lithium producer 
listed on the Australian Securities Exchange (Code: GXY) and is a member of 
the S&P/ASX 300 Index.

Galaxy has built an advanced and fully-automated Lithium Carbonate production 
facility in Jiangsu Province, China ("Jiangsu Plant"). The Jiangsu Plant has a 
name-plate capacity of 17,000 tpa, is primarily focused on producing battery 
grade lithium carbonate, and is aiming to become the largest producer in the 
Asia Pacific region and the fourth largest in the world.

Galaxy is currently advancing plans to develop the Sal de Vida Lithium and 
Potash Brine Project ("Sal de Vida") in Argentina, which is situated in the 
Lithium Triangle, a region where Chile, Argentina and Bolivia meet, and 
presently accounts for 60% of global lithium production. Sal de Vida has 
excellent promise as a future low cost production facility.

The Company also owns the Mt Cattlin Spodumene Mine near Ravensthorpe in 
Western Australia and the James Bay Lithium Pegmatite Project in Quebec, 

Lithium compounds are used in the manufacture of ceramics, glass, electronics 
and are an essential ingredient in producing battery materials such as cathode 
and electrolyte, in the manufacture of long life lithium-ion batteries, which 
are used in consumer electronics, power tools, electric bikes, hybrid and 
electric vehicles. Anticipating the growing demand in coming years, Galaxy is 
positioning itself to become a major producer of lithium products

Caution Regarding Forward Looking Information.

This document contains forward looking statements concerning Galaxy.

Forward-looking statements are not statements of historical fact and actual 
events and results may differ materially from those described in the forward 
looking statements as a result of a variety of risks, uncertainties and other 
factors. Forward-looking statements are inherently subject to business, 
economic, competitive, political and social uncertainties and contingencies. 
Many factors could cause the Company's actual results to differ materially 
from those expressed or implied in any forward-looking information provided by 
the Company, or on behalf of, the Company. Such factors include, among other 
things, risks relating to additional funding requirements, metal prices, 
exploration, development and operating risks, competition, production risks, 
regulatory restrictions, including environmental regulation and liability and 
potential title disputes.

Forward looking statements in this document are based on Galaxy's beliefs, 
opinions and estimates of Galaxy as of the dates the forward looking 
statements are made, and no obligation is assumed to update forward looking 
statements if these beliefs, opinions and estimates should change or to 
reflect other future developments.

Not For Release in US

This announcement has been prepared for publication in Australia and may not 
be released in the U.S. This announcement does not constitute an offer of 
securities for sale in any jurisdiction, including the United States, and any 
securities described in this announcement may not be offered or sold in the 
United States absent registration or an exemption from registration under the 
United States Securities Act of 1933, as amended. Any public offering of 
securities to be made in the United States will be made by means of a 
prospectus that may be obtained from the issuer and that will contain detailed 
information about the company and management, as well as financial statements.

Corporate Andrew Meloncelli Company Secretary Galaxy Resources Ltd Tel 
(office): +61 (0) 8 9215 1700

Media Contact Jane Munday FTI Consulting Tel (office): +61 (0) 8 9485 8888 Tel 
(mobile): + 61 (0) 488 400 248

SOURCE: Galaxy Resources Limited

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CO: Galaxy Resources Limited
ST: Quebec

-0- Aug/27/2013 02:22 GMT

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